Originally created 06/30/97

Disney lawsuit shows real power of animation



LOS ANGELES (AP) - Without animated hits like "Fantasia" and "Beauty and the Beast," the Walt Disney Co. would have lost nearly $100 million on its movies in the early 1990s, according to corporate documents filed for an ugly breach-of-contract lawsuit.

The legal action, intensifying just as Disney's "Hercules" is hitting theaters, has opened a small window into the real power of animation.

Disney's new film releases near the end of studio chief Jeffrey Katzenberg's reign would have lost $92.6 million without the video releases of animated musicals like "Beauty and the Beast," according to the documents filed in the last month.

The Disney corporate records also show the video releases of animated classics, including "Fantasia" and "101 Dalmatians," accounted for roughly half of Disney's entire 1992 corporate profits.

The records, available in court files for Katzenberg's $250 million breach-of-contract lawsuit, still bear Disney internal stamps: "Confidential - access limited by protective order,"

Disney has made no settlement offer, said company attorney Louis Meisinger. Trial is to begin Nov. 18.

"I have rarely been in a situation where there has been no movement at all toward settlement," said Katzenberg's attorney, Bert Fields.

Katzenberg joined Disney in 1984 and turned its animation unit into Hollywood's most profitable franchise. He left in 1994 after he was passed over for its presidency, going on to co-found the DreamWorks studio with director Steven Spielberg and music producer David Geffen.

He sued Disney in 1996, claiming the studio owes him 2 percent of profits linked to TV shows, films and related spinoffs developed under his supervision but released after he left Disney. He also is challenging Disney's accounting of films and ancillary products released while he ran the studio.

Meisinger says Katzenberg left two years early under a contract that expressly said that he relinquished any claim to profits if he walked out. Disney says Katzenberg was paid the full amount of any bonuses owed and that it even accelerated deferred payments.

The lawsuit maintains Disney suspended the bonus after Katzenberg left Disney, even though projects he supervised still generate profits today, such as the stage shows, videos, games and merchandise based on 1994's "The Lion King."

One previously confidential document connected to the litigation lists profits and losses for Disney movies released in the early 1990s. "Billy Bathgate," a big-budget Dustin Hoffman movie released in 1991, lost a stunning $55.9 million, according to Disney's accounting, while the failed 1992 musical "Newsies" cost Disney $42.8 million.

"The Hand that Rocks the Cradle" brought a profit of $41 million in 1992, while "Blame it on the Bellboy" in 1991 lost $10.8 million and "Passed Away" posted a 1992 loss of $18.9 million.

The unaudited numbers do not include distribution fees and all earnings from international and home video. People who worked with Katzenberg at the time say "Billy Bathgate" and "Newsies" lost less than the reports indicate.

More telling is how much money Disney would have lost without its animated film library. The 1992 worldwide home video release of 1940's "Fantasia" brought in $184.4 million in profits. The home video gains recorded by 1961's "101 Dalmatians" totaled $96.8 million in the United States alone. Altogether, animated re-releases contributed $415 million in Disney profits - more than half of the entire company's $816.7 million income, the documents show.

New animated releases, including "Beauty and the Beast," barely kept the entire movie slate in the black, as new films made just $19 million on revenues of $1.3 billion, a profit margin of just 1.5 percent.

Disney's live-action films have become more profitable under new studio chief Joe Roth. Recent hits include "The Rock," "Ransom," the live-action "101 Dalmatians" and "Con Air."



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